Friday, October 31, 2008

GMU Professor Donald J. Boudreaux (cafehayek) writes in CSM that “The late Robert Heilbroner – a socialist for most of his life – admitted after the collapse of the Iron Curtain that socialism "was the tragic failure of the twentieth century. Born of a commitment to remedy the economic and moral defects of capitalism, it has far surpassed capitalism in both economic malfunction and moral cruelty."

This failure was unavoidable. It was predicted from the start by wise economists, such as F.A. Hayek, who understood that no government agency can gather and process all the knowledge necessary to plan the productive allocation of millions of different resources”.

This extempore may be one of the great comments on India Economy! It is worth to note few paragraphs.

"I think you have to distinguish sharply between a redistributive state and a regulatory state. I give you Sweden, which is a very highly redistributive state, but is not a highly regulatory state. As I understand it, the original Constitution of India called for a redistributive state. The ethos called for a regulatory state, and they turned out to be both very different and I would say ultimately incompatible.

That was a large part of the motivation behind some of the measures that were taken then. Secondly, you are quite right that one of the things that India inherited was a good civil service. I came back from India on my first trip there saying that in my experience, I had never met a class of civil servants who were as able as the Indian Civil Service. However, they weren't in accord with the principles that were going to be followed. Many of them, particularly Mr HM Patel, would not have gone along, I suspect he would not have been an enthusiastic participant of the Mahalanobis Plan. I don't know….you tell me. Am I wrong? There were people at the time who recognized fully what the consequences were going to be, the most notable example is BR Shenoy in his dissenting view on the committee of experts examining the Second Five Year Plan.

In my opinion, the most serious problem of India in the economic sphere can be pinned down very quickly. It has to do with the pegging of the exchange rate and the existence of change controls. My view on this is based not only on India alone; it is based on country after country. There is no other measure which opens itself so much to corruption than to spreading from one regulation to another. In some ways, if you could pull that pin out, much of the rest of the superstructure would collapse. On that particular issue, it was initially an open issue in India.

On a very different subject that you touched in your comment, I share completely with you the outrage at the picture of extraordinary ostentation in the midst of extraordinary poverty. I venture to predict that if you ask where the money comes from that finances that ostentation, you will find in almost every single case it comes from government favour. It is created by the present system of planning. The idea that the present system of planning is directed at egalitarianism is, I think, an absurd idea… I remember an incident which I think is very amusing. I once was in Hong Kong ten years ago, and I was entertained at the home of a very wealthy Hong Kong Indian businessman. He's the person who owns the Hilton, Hare Nina. It was at his home. This is a man who has 50 people to dinner every night. One of the people who was present there was an Indian capitalist who would be an absolutely perfect image for a New Yorker cartoon of a bloated capitalist sitting on a pile of money. He was big, fat and just looked the image.

I want to go back for a moment about two comments about T.N.'s. One is, there are certain words which are red lights to fallacies. One of those words is "need". I do not know any sentence that anybody ever uses with "need" which doesn't turn out to have a fallacy embedded in it. The word that leads me to is not need but "essential". "Essential import". Every economist knows that if you have adjusted your resources properly, every item you buy is essential at the margin. It is a distinction between marginal and average. The word "essential" is a meaningless word, and any place you see it used, you can be sure there is a fallacy. The same thing with the word "shortage". I noticed that when T.N. came to the word shortage, shortage of foreign exchange, he hesitated. He said an "alleged shortage". Economists may not know much, but there is one thing we know very well. That is how to create shortages and surpluses. Tell us what you want a shortage in, and we'll create it. The only thing you have to do is set a maximum price that is below the market price, and you'll have a shortage. If you want a surplus, we'll produce that, too. We'll give you a case in which we'll offer a price higher than the market price. We've got a surplus of wheat for that reason in the United States, and we've got a shortage of housing in New York for that reason. The talk about a shortage of foreign exchange is always an evasion of a problem. Some how or other, economists ought to get into the practice of never using the word shortage without accompanying it by at what price."

One more point and I'll be through. You say that you want to dismantle the exchange rates over a ten year period. I think you're wrong. There are some things you want to do immediately overnight and some things you want to drag out. There are two aphorisms that bring out the point. One is: don't cut a dog's tail off by inches, and the other is haste makes waste. They're the opposite of one another, but each is right in some occasions. It seems to me as a generalization with respect to any price control that it should be done instantly. You should cut the dog's tail off at once. If you're going to abolish exchange control, it ought to be announced on a Friday or Saturday night to be done on Sunday morning. Just as Ludwig Erhardt in the German reform announced overnight, over a weekend, he did it on Sunday because the American and British control offices were closed and so they couldn't countermand his order. That is why he did it on a Sunday. He did it at one full stroke, all price controls abolished. Margaret Thatcher abolished exchange control in Britain overnight. Exchange control, it seems to me, is one of those things you have to abolish overnight. If you stretch it out, you will never abolish it.

I don't think we ought to get involved in words, and I don't mind if we drop the word socialism. I would say that a system of detailed controls or whatever you call it, is a system which generates inequality. The private ownership of property is not enough. Some of the main beneficiaries from your controls are private enterprises and moreover as I cited in my example, they also support the system of controls and regulation. What I say is that the combinations of controls and regulations, whatever you call it, produces inequality, and chief among them is the foreign exchange control. If you could eliminate the foreign exchange control, you will eliminate a good bit of the harm which is currently being done by all your regulations.

If I might say, I have enormous sympathy with this view that it's the same old story. It is! Exactly, and that's what's distressing about it. It's a shame that in 40 years, there been no real major change in the structural characteristics of the Indian economy. That's the real tragedy."

Few things that US citizens should keep in mind before voting quietly says Michael Reagan in Townhall“There's an old saying that you can't be half-socialist any more than you can be half-pregnant; get knocked up with a socialist fetus and you'll have to deliver a full-born Marxist. There's nothing inbetween. Try it, you'll like it, and if you don't, as the lads in the Gestapo used to tell people, they had ways to make them like it………. There's an old saying that you can't be half-socialist any more than you can be half-pregnant; get knocked up with a socialist fetus and you'll have to deliver a full-born Marxist. There's nothing inbetween. Try it, you'll like it, and if you don't, as the lads in the Gestapo used to tell people, they had ways to make them like it.”

Economist Thomas Sowellsays that “Some elections are routine, some are important, and some are historic. If Sen. John McCain wins this election, it probably will go down in history as routine. But if Sen. Barack Obama wins, it is more likely to be historic — and catastrophic…………The economies of China and India began to take off into high rates of growth when they got rid of precisely the kinds of policies that Obama is advocating for the United States under the magic mantra of change.”

Suhel Seth writes in ET“States in India are levying a state sales tax of 25% to 32% on ATF (aviation turbine fuel). But the catch is not just the obscenely high tax. The base rate of the ATF that is being offered by the oil companies is double the international price of fuel at current rates.

The Airports Authority of India charges the highest for any aircraft related activity. For instance, the landing charges in India are the highest in the world; add to that the infrastructure limitations in terms of runways and you have yet another dangerous situation. Every minute you spend hovering in the air costs a fortune at current ATF rates, but yet again, this is not being factored in”.

Thursday, October 30, 2008

Arvind Panagariya, writes inET“Total revenues of the industry have grown from Rs 60 billion in 2004 to Rs 96 billion in 2007. This represents an annual growth of 17% in nominal terms…… Despite this transformation, one feature of Bollywood films has remained omnipresent: the item number. From Cuckoo and Helen to Bindu and Padma Khanna to Mallika Sherawat and Rakhi Sawant, the item girl has remained an indispensable ingredient in Indian films. Indeed, it has grown in respect so that even superstar actresses such as Madhuri Dixit and Aishwarya Rai Bachchan now contribute their own item numbers!”

MEGHNAD DESAI writes in Outlook “The best of the lot is a short memoir by Mountbatten who writes of his first visit to India in 1921 along with the Prince of Wales. He met and danced with Edwina Ashley at the old Viceregal Lodge. They sat out the fifth dance, he proposed to her and then they got married. Twenty-six years later, Mountbatten found himself in the same room in the Viceregal Lodge—now the Convocation Hall of Delhi University—conferring an honorary degree on...who else but Pandit Nehru!”

In In Guardianhesaysthat, “See the Muslims have one god. The Christians have three gods. And we Hindus have 36,000,000 gods. Making a grand total of 36,000,004 divine arses for me to choose from. Now there are some, and I don't just mean Communists like you, but thinking men of all political parties, who think that not many of these gods actually exist”.

JOSEPH STIGLITZsays in Timethat “Capitalism may be the best economic system that man has come up with, but no one ever said it would create stability. In fact, over the past 30 years, market economies have faced more than 100 crises. That is why I and many other economists believe that government regulation and oversight are an essential part of a functioning market economy. Without them, there will continue to be frequent severe economic crises in different parts of the world. The market on its own is not enough. Government must play a role”.

He also says that “This crisis may have taught us that unfettered markets are risky. It should also have taught us that unilateralism can't work in a world of economic interdependence”.

The world dream of free trade and unilateralism in classical term may not be unfettered.

Tunku Varadarajan says inTOIthat “the Rig Veda, a sacred Hindu text that dates back some 4,000 years: “O Moon! We should be able to know you through our intellect/ you enlighten us through the right path.”

Wednesday, October 29, 2008

The unusual writings often book review by A G Noorani is quite interesting one in which he says that the “progression to the twentieth century historian’s views and approved practice. In this scene it was possible to write ‘The History of History’.”

And a essay on "Above the law" he writes "In no other democracy governed by the rule of law does such a rule exist. In India, it has not been laid down by a law enacted by Parliament, but by a narrow majority (3-2) of the Bench that heard the case".

Yoginder K. Alaghwrites in Indian Express with less concern that “the urban pessimists in India said that urbanisation was not rising, would not and should not rise fast. They were some of my best friends and colleagues at the Sardar Patel Institute, JNU and the Planning Commission. My argument that the urbanites had a point went unheeded”. Further no sign of lust he says “I said but I was asked to keep quiet. In those days after saying India was growing fast you ducked”.

Everything is challenge in the hands of any governments.

What Sauvik says in contrast is quite possible in building the big cites with out of too much governments and their stupidity.

Romain Rancière, Aaron Tornell and Frank Westermann argue in Mint that “The $700 billion bailout bill is equivalent to 5% of gross domestic product (GDP). Adding to it the cost of other rescues—Bear Stearns Companies Inc., Freddie Mac and Fannie Mae, AIG—the total cost could go up to $1,400 billion, which is around 10% of GDP. In contrast, Mexico incurred bailout costs of 18% of GDP following the 1994 Tequila crisis. In the aftermath of the 1997-98 Asian crisis, the bailout price tag was 18% of the GDP in Thailand and a whopping 27% in South Korea. Somewhat lower costs, although of the same order of magnitude, were incurred by Scandinavian countries in the banking crises of the late 1980s—11% in Finland (1991), 8% in Norway (1987), and 4% in Sweden (1990). Lastly, the 1980s savings and loans debacle in the US had a cumulative fiscal cost for the taxpayer of 2.6% of GDP”.

And what is astonishing from the same article is “Over the last 25 years, Thailand grew 32% more than India in terms of per capita income despite a major financial crisis”

The Economist Book Review says that “India’s regulations against sodomy and soliciting are another ugly local feature. By criminalising gay sex and prostitution, these laws have blocked many sincere efforts to quell the virus”.

Recent Economist article argues that “Given the extent of negative equity and the risk of a negative spiral of defaults and falling prices, efforts to keep homeowners in their homes may yet be necessary to solve the crisis. Mr Zingales’s proposal looks neatest. It would cost less, leaving resources free for a more general fiscal stimulus. But it won’t be entirely costless: any forced renegotiation, even a relatively cheap one, may well lead to a higher cost of credit in the future”.

Professor Deepak Lal writes in BS “Bureaucrats become capitalists with the right set of incentives”

Interestingly he note that “the Chinese had evolved a form of local bureaucratic competition based on granting ‘use’ rights to urban and industrial land without the need for corruption. At the heart of this was the evolution of a set of incentives provided to bureaucrats in xians (municipalities) to act like landlords selecting and granting share-cropping contracts to investors. The economic power of the xians lay in their sole right to decide and allocate the use of land. This right did not belong to villages, towns, cities, provinces or even Beijing. The xians are part of seven geographically determined layers: country, provinces, cities, xians, towns, villages and households. These layers are vertically linked by responsibility contracts (which, from their Chinese name, imply, “guarantee what I want and you can do what you want”). But horizontally, there are no contractual links and they are free to compete”.

Half of the time, Indian new papers and the so called journalists work with bogged minds and thoughts in front of the people of this country no matter which thoughts or idea are imported and exported from India if any.

What news papers, editorials wanted to say or what they don’t wanted to say or what they see or don’t see about the politician’s action are the first by product of Made in India since the impendence. Nevertheless they produce something for nothing. This something goes with something else what is that something else who can ask these so called one of the pillars of democracy for the fallacies?

For example, see the yesterday editorial of TOI on “How Dare You” which says “that our education system does not foster a culture of inquiry — holds true for most of our centres of learning. This is a serious problem because its impact on students is life-long and has consequences for India’s future”. The word “most of our centres of learning” should read all of the Centre of Learning, its not so?

It is also acknowledges that the present education system “encourages a hierarchical relationship between teacher and student” true but the remedy lies with the institutional autonomy and the honest teachers who never allow such practice of “hierarchical” mindset but allow to preach freedom to build true thinker in the sense of their own actions for which they are accountable. Are the teachers in the schools, colleges and universities and institutions are accountable for their actions? Not quite so because the state gives more than enough power to ask themselves (unions) why should be.

That’s how Dr Sowell says “The power to tax is the power to destroy” not only where they tax but also where they don’t tax, if any.

At last the editorial protest for “original minds” and thinkers but it is shameful if it is not aware of what the great thinker Adam Smith said (as I posted here) “the teachers had no jurisdiction over their pupils, nor any other authority besides that natural authority, which superior virtue and abilities never fail to procure from young people towards those who are entrusted with any part of their education.”

Until this sort of mindset is built among teachers and students there is no hope to expect any great thinker for many centuries.

It is not surprise to ask this question: is anybody aware of these lines in Indian Universities particularly among political and economics professors. The answer is I don’t know.

In Forbes Oxford Analyticawrites the “Supporters of the current federal interventions in the marketplace defend it as "government action to free the markets"--an idea that even conservative economists such as Friedrich Hayek or Milton Friedman might have accepted”.

But no way to think as for as F A Hayek is concerned, as I have already posted here.

“The appearance of periodically recurring economic crises is the necessary consequence of repeatedly renewed attempts to reduce the 'natural' rates of interest on the market by means of banking policy. The crises will never disappear so long as men have not learned to avoid such pump-priming, because an artificially stimulated boom must inevitably lead to crisis and depression....

All attempts to emerge from the crisis by new interventionist measures are completely misguided. There is only one way out of the crisis: Forgo every attempt to prevent the impact of market prices on production. Give up the pursuit of policies which seek to establish interest rates, wage rates and commodity prices different from those the market indicates. This may contradict the prevailing view. It certainly is not popular. Today all governments and political parties have full confidence in interventionism and it is not likely that they will abandon their program. However, it is perhaps not too optimistic to assume that those governments and parties whose policies have led to this crisis will some day disappear from the stage and make way for men whose economic program leads, not to destruction and chaos, but to economic development and progress”.

Writing in ET George Thomassays that “One thing should be kept in mind. Edmund Burke once said: "Folly alone cannot wholly ruin an established empire. Cunning must come to its aid". There seems too much of cunning in the post-globalisation era”.

EDMUND MORRIS writes in NYT: an interview with former President of USA Theodore Roosevelt, but it is quite unconvincing one.

Theodore Roosevelt, Pundit

ByEDMUND MORRIS

Published: October 27, 2008

THE former president, born 150 years ago today, was interviewed in his childhood home at 28 East 20th Street. He has long been a ghostly presence there. The house is now the Theodore RooseveltBirthplace National Historic Site. Due to Roosevelt’s great age, it is difficult to tell how well he hears contemporary questions. But he is as forceful as ever in expressing himself. His statements below are drawn from the historic record and are uncut except when interrupted by his interviewer.

Q.Happy birthday, Mr. President! Or do you prefer being called Colonel?

ROOSEVELTI’ve had the title of president once — having it twice means nothing except peril to whatever reputation I achieved the first time.

Q.“Colonel,” then. Do you think the Congress elected two years ago as a foil to the Bush administration has fulfilled its mandate?

A.I am heartsick over the delay, the blundering, the fatuous and complacent inefficiency and the effort to substitute glittering rhetoric for action.

Q.Do you blame the House Democratic majority?

A.A goodly number of senators, even of my own party, have shown about as much backbone as so many angleworms.

Q.I hope that doesn’t include the pair running for the presidency! What do you think of Senator John McCain? He often cites you as a role model.

A.He is evidently a man who takes color from his surroundings.

Q.Weren’t you just as unpredictable in your time?

A.(laughing)They say that nothing is as independent as a hog on ice. If he doesn’t want to stand up, he can lie down.

Q.Mr. McCain has always prided himself on his independence. At least, until he began to take direction from chief executives and retired generals —

A.But the signs now are that these advisers have themselves awakened to the fact that they have almost ruined him.

Q.Does his vow to give Joe the Plumber a tax break remind you of Reaganomics?

A.This is merely the plan, already tested and found wanting, of giving prosperity to the big men on top, and trusting to their mercy to let something leak through to the mass of their countrymen below — which, in effect, means that there shall be no attempt to regulate the ferocious scramble in which greed and cunning reap the largest rewards.

Q.In Washington today, Colonel, you’re increasingly seen as the father of centralized, executive, regulatory control.

A.Great corporations exist only because they are created and safeguarded by our institutions; and it is therefore our right and duty to see that they work in harmony with these institutions.

Q.Especially now that we’ve seen the end of another age of laissez-faire economics?

A.These new conditions make it necessary to shackle cunning, as in the past we have shackled force. The vast individual and corporate fortunes, the vast combinations of capital —

Q.Even vaster in your day! John D. Rockefeller was richer than Bill Gates, dollar for dollar.

A.Quite right.(He dislikes being interrupted.)And please, let this now be as much of a monologue as possible.

Q.Excuse me, you were saying that vast combinations of capital ...

A.... create new conditions, and necessitate a change from the old attitude of the state and the nation toward the rules regulating the acquisition and untrammeled business use of property.

Q.So you approve of the federal bailout?

A.I think we have got to face the fact that such an increase in governmental control is now necessary.

Q.Should we condone the huge severance packages paid to executives of rescued corporations?

A.There is need in business, as in most other forms of human activity, of the great guiding intelligences. Their places cannot be supplied by any number of lesser intelligences. It is a good thing that they should have ample recognition, ample reward. But we must not transfer our admiration to the reward instead of to the deed rewarded; and if what should be the reward exists without the service having been rendered, then admiration will come only from those who are mean of soul.

Q.So we should withhold our envy of Richard Fuld, the chairman of Lehman Brothers, for taking home half a billion before his company went down?

A.Envy and arrogance are the two opposite sides of the same black crystal.

A.Unless I am greatly mistaken, the people have made up their mind that they wish some new instrument.

Q.You’re not afraid that he’s primarily a man of words? Like Woodrow Wilson, whom you once called a “Byzantine logothete”?

A.It is highly desirable that a leader of opinion in a democracy should be able to state his views clearly and convincingly.

Q.Not Mr. McCain’s strong point!

A.Some excellent public servants have not the gift at all, and must rely upon their deeds to speak for them; and unless the oratory does represent genuine conviction, based on good common sense and able to be translated into efficient performance, then the better the oratory the greater the damage to the public it deceives.

Q.Mr. McCain might argue that his life of service and suffering is eloquence enough. Have you read his autobiography?

A.I should like to have it circulated as a tract among an immense multitude of philanthropists, congressmen, newspaper editors, publicists, softheaded mothers and other people of sorts who think that life ought to consist of perpetual shrinking from effort, danger and pain.

Q.Has Mr. Obama not suffered too? Not at the heroic level of Mr. McCain, but in transcending centuries of race prejudice to become a viable presidential candidate — only to be nearly stopped by Hillary Clinton!

A.I think that he has learned some bitter lessons, and that independently of outside pressure he will try to act with greater firmness, and to look at things more from the standpoint of the interests of the people, and less from that of a technical lawyer —

Q.“Technical,” Colonel? He took his law degree straight onto the streets of Chicago and applied it to social problems.

A.He may and probably will turn out to be a perfectly respectable president, whose achievements will be disheartening compared with what we had expected, but who nevertheless will have done well enough to justify us in renominating him — for you must remember that to renominate him would be a very serious thing, only to be justified by really strong reasons.

Q.He doesn’t have Mr. McCain’s foreign policy experience. As president, how would he personify us around the world?

A.It always pays for a nation to be a gentleman.

Q.There’ll be Joe Biden to counsel him, of course. Assuming Mr. Obama can keep track of what he’s saying.

A.(laughing)You can’t nail marmalade against a wall.

Q.Talking of foreign policy, what do you think of Mr. McCain’s choice of a female running mate?

A.Times have changed (sigh). It is entirely inexcusable, however, to try to combine the unready hand with the unbridled tongue.

Q.How will you feel if Sarah Palin is elected?

A.I shall feelexactlythe way a very small frog looks when it swallows a beetle the size of itself, with extremely stiff legs.

Q.What’s your impression of President Bush these days?

A.(suddenly serious)He looks like Judas, but unlike that gentleman has no capacity for remorse.

Q.Is that the best you can say of him?

A.I wish him well, but I wish him well at a good distance from me.

Q.One last question, Colonel. If you were campaigning now, would you still call yourself a Republican?

A.(after a long pause)No.

Edmund Morris is working on the third and final volume of his biography of Theodore Roosevelt.

Saturday, October 25, 2008

"Since 1980, at least 11 people have been killed by pet pythons in the United States, according to Beth Preiss, director of the U.S. Humane Society's exotic pets campaign. Two years ago, an Ohio man was killed when his 13-foot boa constrictor coiled around his neck. A man in Indiana also died that year after a 14-foot python constricted around his upper body.

The tiger reticulated python is native to Southeast Asia and typically grows to 12 to 15 feet, said Stephanie Kokosinski, herpetology curator at the Virginia Living Museum in Newport News. People with little experience handling snakes shouldn't look to adopt those pythons, she said".

Professor G S Bhallawrites in BS “but in times of crisis, it is only Keynesian remedies that are likely to work.” If it is that why it has not worked over last fifty years to improve the lives of the people of this country or any other developing country?

DIPANKAR GUPTAwrites in TOI “We have to decide what kind of society we want before we let loose the market……………When one plans for society, one plans for the long run” true but it may not be true what he says that “The muscular sprinter is useless when it comes to running uphill, as only a marathon specialist can. If one were to think long distance then policies that fundamentally encourage equality need to be at the base of every political decision. Nietzsche once said that if a priest and a convict were made to climb mountains they would end up as equals. They would both be exhausted.

To favour the market and blow the whistle on society only perpetuates the Marx & Spencer brand of politics. Do we really want that? Should not the dead rest in peace?”

For me it is quite interesting as I move towards the basic principles of Austrian economics in a true F A Hayek way of thinking. I loved it with great fun in reading and also with reasons muse.

There are other reviews also and it is not the point to added one more review but its own some unique.

My Review: Cardinal Discovery of Incentive Economics

The cardinal human actions become many subjects over a period of time through the discourse of reasons otherwise the word ‘human’ would have been disappeared many century ago. And the use of common sense is a free (for every one) but important tool that actually helped to frame the once inner economist. To discover that frame has its own motive, objective and incentive to come out some sort of understanding of any actions derived out of once inner economist with other men is a conventional, yet applies in modern as well.

Men may move to one place to other place to find many things, yet with their inner economists. But no men would live without the reasons perhaps more meaningfully and certainly this may be true with incentive principles also.

Tyler Cowen is Economics Professor at GMU in US. His recent book “Discover your Inner Economist- Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist”, it has ten chapters of which chapter four, five, nine and ten engage readers fruitfully with exiting ideas.

This book is in a way quite readable one, as it gives incentive to know more new methods to discover your inner economist not only when you go out for shopping, tour, how to handle your PhD students energy, getting cured from dentist etc but also when you read books, search of tourist guides etc.

Mr Cowen asks his students to give the postcard version of their new ideas whenever they prose. He has been called as POSTCARD MAN in his circles. This is terrible imposable in Indian universities. I heard even student do all other works in professor house to bring vegetables and drop professor children in schools etc except try to read good literature and bring new ideas to enrich the subject knowledge. Not even they think of debate on any issues.

Interestingly Mr Cowen stresses the most important perhaps a new way to look at the means of using time and attention to discover once inner economist with an incentive so rightly argues that “in our highly civilized society the scarcities I notice most often are those of attention and time”(p.47-48).

He also excites reader with a observation from India like the nurse sells child for some $ but charges more for male child than the female child! It read “In Bangalore, India the nurse often takes away the newborn baby, returning it only when the parents pay a bribe; the price is $12 for a baby boy, $7 for a baby girl” (p. 220).

More importantly he concerns “I faced this dilemma when I first visited India in 2004. I have traveled to about seventy foreign countries…..yet nothing had prepared me for India. Here was extreme poverty on a scale of the many millions. And unlike in most Africa, the crowding was extreme. The air was a mix of smells from burning charcoal, rotting garbage, human urine and excrement. For all the (justified) talk about India on the rise, most of the country still lives with medieval technology but modern levels of crowding”.

And what he typically says that “at first I could not understand why so many of the streets, even there streets with no nearby stores or attractions, were so full of people. I soon realised those people were living on the streets……Calcutta (now Kolkata, but I will use the former and better known name) was the most extreme example of poverty and crowding I encountered. The recent India boom came to Calcutta later than in other parts of India. The surrounding state of Bengal has had socialist and communist governments for a long time, and not to its advantage. Calcutta also appears to have better developed “culture of begging”,…The very poor had had begging “targets” for a longer period of time than in, say Bombay (Mumbai). Walking down the main street in front of my hotel meant being importuned a dozen times within the span of a minute” (p. 187-188).

He also excites reader with the typical information like there was scarcity of stones during a riots then a woman who sold more stones for that riots and earned $70! It read “during one riot in Michigan, one women sold stones to rioters. According to Police, she used the money to pay her cable television bill. Small stones went for $1, larger stones brought in $5 a piece. Most of the rocks were thrown at the police” (p. 220).

In one sense, this book is all about the world is not so flat to find information easily without the incentives and motivations.

If one wants to engage in love, buy banana, get cured from dentist, new idea from PhD student to discover, make tour worthy, to make the world work for you and understand that “given that we don’t have markets in everything, we have to motivate other people, and ourselves to get where we want to be” (p.3).

The book is as simple as with the essential principles of economics-incentive, scarcity, money incentive, non- money incentive but quite pluck bananas from economics of trees.

Sunanda K Datta writes in Business Standard “Let’s replace the chair then for Keynes while relegating Marx to the library shelves of unread books”. Even the world will have no rule book to become a better place without the works of F A Hayek.

The bubble of blame game is the one which is constant in politician mind, no matter whether it will bust before the election or after the election.

See Few Cases Here

The former finance minister and BJP leader Yashwant Sinhasaid “Mr Chidambaram has no right to give so much pain to the aam aadmi, the markets and the economy,”. And Mr Sinha demanded to know why the finance minister was speaking on behalf of the market regulator. “We demand that there should be an enquiry into the finance minister’s statement yesterday in order to find out who all are the people who have made money out of it,” Mr Sinha said”.

India is also home to “one of the worst in the world with around 100,000 people killed in traffic accidents last year alone. The World Bank estimates that every year road accidents cost India about 3 per cent of its gross domestic product which was more than $1 trillion in 2007”.

I read many articles about the present world financial crisis but the one which economist and Nobel Laureate VERNON L. SMITH wrote in Wall Street journal is quite an interesting one he says that “The housing disaster-in-motion was widely reported, complete with warnings, before the crash. But every word fell on deaf ears, because bubbles areneverabout reason, cool calculation and courageous politicians willing to risk defeat”.

Friday, October 24, 2008

Arjun K. Senguptawrites in Hindu, “ardent market fundamentalists now recognise that markets often fail” so the “governments have to correct the markets equitably and efficiently..which policymakers often do not, because of their reluctance to give up orthodox market solutions” which is the real nonsense to argue.

Ok come to next he is saying that “When private investors are reluctant, we have to depend upon public investment to stimulate investment. We have a large public sector functioning with efficiency, as has been demonstrated by a sustained increase in its profitability. The government may mobilise some of our public sector corporations engaged in the sectors of power, transport, construction and communication to expand investment in our infrastructure. Many of these enterprises have long experience of successful execution of such projects”. He is making murky of every one.

Further he is proposing as loose policy. “….calls for active government intervention in the stock markets to raise their values, through some kind of sovereign funds for purchasing stocks. Without buying designated assets, as some others are trying, we may use our mutual funds. They can do the job quite effectively with the minimum involvement of the government. A simple mechanism would be opening a window of lending to the mutual funds against their purchase of stocks or retaining them even when there is a high demand for redemption. To make this window attractive, this lending can be at variable interest rates, such as at a zero rate for the first six months, raising it steadily for every succeeding six months. If the mutual funds can invest in stocks whose prices go up quickly, they can retain the profits or pass them on to the investors, paying only a relatively small rate of interest. This is a simple mechanism which can have an immediate impact on our stock market.

The response of public intervention in a situation of market failure must be designed in such a way that attacks the problem at its roots. The government should use all its instruments with a clear objective. In the current situation the primary objective is to increase the confidence of all market participants in our potential for growth”.

It may be good to get this new amendment in land acquisition law but with out the private property rights it will go long way to provide basic rights to people of this country.

M R Madhavan writes in Indian Express “First, it redefines public purpose as including by a company for “any other purpose useful to the general public”, provided the company has purchased at least 70 per cent of the land required through normal market mechanisms. Second, it changes the method for computing the compensation. The price is linked to sale price in the vicinity. Importantly, the intended use of the land and the value of such land in the market must be factored into the computation. In case the acquisition is for a company, 20 to 50 per cent of the compensation must be offered as shares or debentures. The seller has the choice of accepting this offer or taking a full-cash settlement. Third, the land shall be returned to the government if it is not used for five years from the date of possession. And in case it is transferred, 80 per cent of the capital gains must be shared with the original land owners and their heirs. Fourth, the bill specifies that all persons displaced by the acquisition process — including those who did not own any land — would be rehabilitated and resettled. The process for this is detailed in a companion bill, the Rehabilitation and Resettlement Bill, 2007. Fifth, a land acquisition compensation disputes settlement authority is to be set up with civil court-like powers, which has to adjudicate all disputes within six months. The companion bill that provides for rehabilitation and resettlement suffers from one serious constraint — the language used for many of the benefits is non-binding in nature, and this could result in several benefits being denied. The proposed changes, though welcome, need more than good intentions to be effective”….

In Hindu there is an article by Philip G. Altbach & N. Jayaram, they writes about Indian educational system and the aim of building world class universities, they say it is virtually impossible. According to the Ministry of Human Resource Development, the total Central Universities are 20 (not 18) and According to the Planning Commission the total universities are 378 (not 348). For an example how authors are ignorant of recent change.

They say that “Teachers and academic leaders at colleges and universities have little incentive to innovate higher education…….the idea of a truly world-class university (an institution that can compete with the best in the world) in cities like Guwahati or Bhubaneswar is simply unrealistic. It would be extraordinarily difficult to attract top professors or even the best students, and the “soft” infrastructure, such as most cultural amenities, is missing. High-tech industry is also absent in these locations and would be difficult to lure. No amount of money will guarantee the establishment of a world-class university in such places…………..Indian academics are rewarded for longevity rather than productivity, and for conformity rather than innovation………Deeply ingrained in Indian society and politics, the reservation system may well be justified.

Pratap Bhanu Mehtawrites in Indian Express that “Societies cannot be held together only by coercion (state) or money (markets). Something more is required. In a broader sense, it requires internalisation of norms and values that set limits on what can be bought and sold……….Again, paradoxically, market societies need an even stronger idea that our professional norms are not something that can be always sacrificed to calculations of interest. But if a society sends signals that only incentives matter, it will undermine its own foundations”.

Profesor Alfred C Stepan says in his interview in Indian Express, that “Now look at Tamil Nadu. Our 50,000-persons survey of the five countries of South Asia in 2005-6 tells us that the people of the state rank way above the Indian average in terms of pride in their Indian identity, as well as satisfaction with democracy and trust in government. And yet, they also rank way above the Indian average in pride in their Tamil identity. The data is amazing. It affirms that human beings are capable of multiple and complementary identities”.